Re: He forgot a level.

I'd change the word "work" to the phrase "make sense". That is, for UBB to make sense to the rest of us, it should be based on something tied to the costs. That doesn't stop them from billing in a manner that doesn't make sense and UBB does work even when usage isn't truly tied to incremental costs.

In my area, I get charged based on how much water I use and then the sewer company bases their monthly bill by looking at the quarterly inbound water consumption. The idea is that's the amount you send into the sanitary sewer system since we don't water lawns, gardens, fill swimming pools or wash cars in the winter quarter.

Whether or not billing like this makes sense, they still do it even though both systems are built to a certain capacity and have few incremental costs.

You keep saying UBB doesn't work for ISPs but it does. Whether or not it makes sense or is a raw deal for who receive the bill is entirely different question.

Regarding the retail example, at one point I believe you claimed that UBB would cause ISPs to never make money. I wholeheartedly disagree. As I said, every day a retailer takes the risk that they won't cover their fixed caused with their variable sales. Why is it different for an ISP just because they have limited or no incremental costs? I agree that a retailer can never offer all you want for a flat fee. (They could but the flat fee would be so high, there would be no buyers.) It just doesn't work for them because they have mostly incremental costs. Just because an ISP doesn't have significant incremental costs, why do you think that invalidates a UBB model?

The only thing that invalidates a UBB model is if it's not feasible to measure the usage by which you bill. For instance, charging someone for every hour they wear a pair of sunglasses. It could be done but it's impossible to determine such a metric short of hiring someone to watch you 24 hours a day. Obviously that kills UBB for the sunglasses industry.

I suppose there is one other thing that invalidates a UBB model. If there's competition and it offers a better deal with their flat-rate plans. This is what torpedoed AT&T when it divested the baby bells and was left with the LD business. Competition stepped in and folks realized they'd been getting screwed for years and AT&T was a rotting corpse until it's child yanked it out of the nursing home and asked it to come live with it.